Judge Gary Spraker of the U.S. Bankruptcy Court for the District of Alaska has issued a ruling nullifying an Alaska Oil and Gas Conservation Commission order that Aurora Exploration must obtain a $6 million bond to cover the eventual plugging and abandoning of wells, if Aurora Exploration is to buy the Nicolai Creek gas field from Aurora Gas.

In a Sept. 26 order, Spraker said that he was granting an Aurora Exploration court motion, requesting that the court require the transfer of Aurora Gas's existing $200,000 bond to Aurora Exploration as an alternative to the $6 million bond and that the court require AOGGC approval of the transfer of operatorship of Nicolai Creek from Aurora Gas to Aurora Exploration. The AOGCC and the Alaska Department of Natural Resources had opposed the motion, claiming that the $6 million represents the likely cost of plugging and abandoning the wells and that, under U.S. bankruptcy law, Aurora Gas cannot transfer its bond to Aurora Exploration.

- ALAN BAILEY

See story in Oct. 1 issue of Petroleum News, available online Friday, Sept. 29 at www.PetroleumNews.com